This Employment
Agreement (the “Agreement”), dated as of
February 9, 2009, is entered into by and between Ascent Media
Corporation (the “Company”), and William R. Fitzgerald
(“Executive”).
The Company,
through its subsidiaries (“Affiliates”), is engaged in
the business of providing technical and creative services to the
entertainment industry. The Company desires to employ Executive,
and Executive desires to accept such employment, under the terms
and conditions set forth herein.
NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1.1
Employment . Upon the terms and conditions hereinafter set
forth, the Company hereby employs Executive, and Executive hereby
accepts employment, as Chairman of the Board and Chief Executive
Officer of the Company.
1.2 Term .
Subject to Article IV below, Executive’s employment
hereunder shall be for a term of five years commencing effective as
of September 17, 2008, and expiring at the close of business
on September 16, 2013 (the “Term”).
1.3 Duties
. During the Term, Executive shall perform such executive duties
for the Company and/or its Affiliates, consistent with his position
hereunder. Executive shall devote such time as is necessary, but in
no event less than 60% of his business time, attention and
energies, to the performance of his duties hereunder. Executive
shall use his best efforts to advance the interests and business of
the Company and its Affiliates. Executive shall abide by all rules,
regulations and policies of the Company as may be in effect from
time to time. Notwithstanding the foregoing, during the Term
Executive may continue to provide services to Liberty Media
Corporation (“LMC”) as an employee and/or officer of
LMC, and Executive may act for his own account in passive-type
investments as provided in Section 5.3, or as a member of
boards of directors of other companies, where the time allocated
for those activities does not materially interfere with or create a
conflict of interest with the discharge of his duties for the
Company.
1.4
Reporting . Executive shall report directly to the Board of
Directors of the Company.
1.5
Location . Except for services rendered during business
trips as may be reasonably necessary, for so long as Executive
continues to render services to LMC, Executive shall render
his
services under
this Agreement primarily from the offices of LMC in Englewood,
Colorado and periodically from the offices of the Company in Santa
Monica, California. Executive shall not be required to relocate his
principal residence from the Englewood, Colorado metropolitan area
to the Santa Monica, California metropolitan area during the Term.
The Company and Executive shall agree on a reasonable budget for
Executive’s travel between Englewood and Santa Monica as
necessary for the conduct of the Company’s business and the
performance of Executive’s duties hereunder
1.6 No
Conflicting Agreement . Executive represents and warrants to
the Company that there are no agreements or arrangements, whether
written or oral, in effect which would prevent Executive from
rendering his services to the Company during the Term in accordance
with the provisions of this Agreement.
2.1
Compensation . For all services rendered by Executive
hereunder and all covenants and conditions undertaken by him
pursuant to this Agreement, the Company shall pay, and Executive
shall accept, as full compensation, the amounts set forth in this
Article II.
2.2 Base
Salary . The base salary shall be an annual salary of $426,000
(the “Base Salary”), payable by the Company in
accordance with the Company’s normal payroll practices.
Beginning as of the first anniversary of the Commencement Date, the
Base Salary shall be reviewed on an annual basis during the Term
for increase in the sole discretion of the compensation committee
(the “Committee”) of the Board of Directors of the
Company.
2.3 Bonus .
For each fiscal year during the Term, in addition to the Base
Salary, Executive shall be eligible for an annual bonus (the
“Bonus”) of between 75% (the “Minimum Target
Bonus”) and 150% of Executive’s annual Base Salary.
(The Company’s fiscal year is currently January 1 through
December 31 of each year.) Executive’s entitlement to
any Bonus will be determined by the Committee in its sole
discretion, based upon the achievement of such criteria as the
Committee may establish in its sole discretion. Nothing in this
Agreement shall be construed to guarantee the payment of any Bonus
to Executive. For the avoidance of doubt, any bonus for the 2008
fiscal year shall be prorated to reflect the period of time between
the Commencement Date and December 31, 2008 ( i.e. ,
September 17, 2008 through December 31, 2008), as
determined by the Committee in its sole discretion, based upon the
achievement of such criteria as the Committee may establish in its
sole discretion.
2.4 Tax
Preparation Assistance . On the Company’s last regularly
scheduled payroll date in August of each calendar year beginning in
2009 and ending in the calendar year following the year in which
the Term expires, the Company shall pay Executive an annual tax
preparation assistance bonus of $5,000.
2.5
Deductions . The Company shall deduct from the compensation
described in Sections 2.2, 2.3 and 2.4, and from any other
compensation payable pursuant to this Agreement, any federal, state
or local withholding taxes, social security contributions and any
other amounts which
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may be required
to be deducted or withheld by the Company pursuant to any federal,
state or local laws, rules or regulations.
2.6 Disability
Adjustment . Any compensation otherwise payable to Executive
pursuant to Sections 2.2 and 2.3 in respect of any period
during which Executive is Disabled (as contemplated in
Section 4.4) shall be reduced by any amounts payable to
Executive for loss of earnings or the like under any insurance plan
or policy sponsored by the Company.
3.1
Benefits . Executive shall be entitled to participate in
such group life, health, accident, disability or hospitalization
insurance plans and retirement plans as the Company may make
available to its other senior executive employees as a group (the
“Company Plans”), subject to the terms and conditions
of any such plans, regardless of whether Executive participates in
any group life, health, accident, disability or hospitalization
insurance plan or retirement plan offered by LMC, except that
Executive may not participate in the Company’s group health
plan at any time that Executive is participating on a voluntary
basis in a group health plan made available by LMC.
Executive’s participation in any Company Plan shall be at a
level, and on terms and conditions, that are commensurate with his
positions and responsibilities at the Company.
3.2
Expenses . The Company agrees that Executive is authorized
to incur reasonable and appropriate expenses in the performance of
his duties hereunder and in promoting the business of the Company
in accordance with the terms of the Company’s (or
LMC’s) Travel & Entertainment Policy (as the same may be
modified or amended by the Company or LMC, as applicable, from time
to time in its sole discretion).
3.3
Vacation . Executive shall accrue a total of one hundred
sixty (160) hours of vacation per year following the date of
this Agreement. If, at any time during the Term, Executive
accumulates two hundred forty (240) hours of earned but unused
vacation time (the “Accrual Cap”), Executive will not
accrue additional vacation time until he has taken a portion of the
previously earned vacation. Executive will again accrue paid
vacation time when his accumulated amount of earned but unused
vacation time falls below the Accrual Cap. Upon termination of
Executive’s employment, any accrued but unused vacation time
will be paid to Executive.
3.4 Key Man
Insurance . The Company may secure in its own name or
otherwise, and at its own expense, life, health, accident and other
insurance covering Executive alone or with others, and Executive
shall not have any right, title or interest in or to such insurance
other than as expressly provided herein. Executive agrees to assist
the Company in procuring such insurance by submitting to the usual
and customary medical and other examinations to be conducted by
such physicians as the Company or such insurance company may
designate and by signing such applications and other written
instruments as may be required by the insurance companies to which
application is made for such insurance. Executive’s failure
to submit to such usual and customary medical and other
examinations shall be deemed a material breach of this
Agreement.
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3.5 Equity
Grants . As part of the consideration for Executive’s
services to the Company during the Term, the Company has made the
following grants to Executive pursuant to the Ascent Media
Corporation 2008 Incentive Plan (the
“Plan”):
(a) A
grant of 91,701 shares (the “Restricted Shares”) of the
Company’s Series A Common Stock, par value $0.01 per
share (“ASCMA Stock”), pursuant to the Restricted Stock
Award Agreement dated as of November 13, 2008, by and between
the Company and Executive (the “Restricted Stock
Agreement”); and
(b) A
grant of options to purchase from the Company, at an exercise price
of $21.81 per share, 347,059 shares of ASCMA Stock (the
“Options”), pursuant to the Non-Qualified Stock Option
Agreement dated as of November 13, 2008, by and between the
Company and Executive (the “Option
Agreement”).
The Restricted
Shares and the Options shall be subject in all respects to the
terms and conditions of the Plan and the Restricted Stock Agreement
and Option Agreement, as applicable.
TERMINATION; DEATH;
DISABILITY
4.1 Termination
of Employment For Cause . In addition to any other remedies
available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to
Executive, to terminate Executive’s employment hereunder at
any time for “Cause” (a “Termination For
Cause”). In the event of a Termination For Cause,
Executive’s employment will terminate and the Company shall
have no further liability or obligation to Executive (other than
the Company’s obligation to pay Base Salary and vacation time
accrued but unpaid as of the date of termination and reimbursement
of expenses incurred prior to the date of termination in accordance
with Section 3.2 above).
For purposes of
this Agreement, “Cause” shall mean: (a) any act or
omission that constitutes a breach by Executive of any of his
material obligations under this Agreement; (b) the continued
failure or refusal of Executive to (i) substantially perform
the material duties required of him as Chairman of the Board and
Chief Executive Officer of the Company and/or (ii) to comply
with reasonable directions of the Board of Directors of the
Company; (c) any material violation by Executive of any
(i) policy, rule or regulation of the Company or (ii) any
law or regulation applicable to the business of the Company or any
of its Affiliates; (d) Executive’s material act or
omission constituting fraud, dishonesty or misrepresentation,
occurring subsequent to the commencement of his employment with the
Company; (e) Executive’s gross negligence in the
performance of his duties hereunder; (f) Executive’s
conviction of, or plea of guilty or nolo contendere to, any
crime (whether or not involving the Company) which constitutes a
felony or crime of moral turpitude or is punishable by imprisonment
of 30 days or more, provided , however , that
nothing in this Agreement shall obligate the Company to pay Base
Salary or any bonus compensation or benefits during any period that
Executive is unable to perform his duties hereunder due to any
incarceration, and provided , further , that nothing
shall prevent Executive’s termination under any other
subsection of this Section 4.1 if it provides independent
grounds for termination; or (g) any other misconduct by
Executive that is materially
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injurious to
the financial condition or business reputation of, or is otherwise
materially injurious to, the Company or any of its
Affiliates.
Notwithstanding
the foregoing, no purported Termination For Cause pursuant to (a),
(b), (c), (d), (e) or (g) of the preceding paragraph of
this Section 4.1 shall be effective unless all of the
following provisions shall have been complied with:
(i) Executive shall be given written notice by the Company of
its intention to effect a Termination For Cause, such notice to
state in detail the particular circumstances that constitute the
grounds on which the proposed Termination For Cause is based; and
(ii) Executive shall have ten (10) business days after
receiving such notice in which to cure such grounds, to the extent
such cure is possible, as determined in the sole discretion of the
Company.
4.2 Termination
of Employment Without Cause . During the Term, the Company may
at any time, in its sole discretion, terminate the employment of
Executive hereunder for any reason (other than those set forth in
Section 4.1 above) upon written notice (the “Termination
Notice”) to Executive (a “Termination Without
Cause”). In such event, the Company shall pay Executive an
amount equal to the sum of the following:
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(a)
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any
Base Salary and vacation time accrued but unpaid as of the date of
termination;
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(b)
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subject to Sections 4.5, 4.6,
4.7, 4.10 and 5.3 below, an amount (the “Severance
Payment”) equal to:
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(i)
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if
the termination of Executive’s employment occurs prior to a
Change in Control (as defined in Section 4.8), the product of
(i) the sum of Executive’s Annual Base Salary plus the
Minimum Target Bonus, both as in effect immediately prior to such
Termination Without Cause, multiplied by (ii) 2; or
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(ii)
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if
the termination of Executive’s employment occurs concurrently
with or following a Change in Control, the product of (i) the
sum of Executive’s Annual Base Salary plus the Minimum Target
Bonus, both as in effect immediately prior to such Termination
Without Cause, multiplied by (ii) 2.5;
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(c)
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any
Bonus to which Executive has become entitled for the calendar year
prior to the year in which such Termination Without Cause occurs
but which remains unpaid at the date of termination (“Unpaid
Bonus”); and
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(d)
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any
reimbursement for expenses incurred in accordance with
Section 3.2.
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Subject to
Section 4.10, any Severance Payment to which Executive becomes
entitled shall be payable in a lump sum on the sixtieth (60
th ) day
following the date of termination of Executive’s employment
(or, if such day is not a business day, on the first business day
thereafter).
In addition,
subject to Sections 4.5, 4.6, 4.7, 4.10 and 5.3 below, to the
extent such coverage is available and is elected by Executive under
the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), and to the extent that Executive is not
otherwise eligible to participate in LMC’s plans, the Company
shall contribute to the health insurance plan maintained by the
Company and covering the Executive and his dependents as of the
date of termination, or any
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successor plan
maintained by the Company, that amount that reflects the
proportionate part of the premium for such coverage that is paid by
the Company as of the date of termination (the “Benefits
Payments”), such Benefits Payments to be made monthly in
accordance with the Company’s normal procedures for the
payment of health insurance premiums, throughout the period
beginning on the date of termination and ending on the earlier
of the 24-month anniversary of the date of termination and the
expiration of the coverage period specified in COBRA, such period
to be determined as of the date of termination (the
“Reimbursement Period”) ( i.e. , Executive shall
bear responsibility for that portion of the health insurance
premiums in excess of the Benefits Payments), or, alternately, in
the Company’s sole discretion, the Company shall reimburse
Executive the amount of the Benefits Payment on a monthly basis
during the Reimbursement Period, upon Executive’s submission
to the Company of adequate proof of payment of the full COBRA
premium by Executive; provided , however , that if
Executive becomes employed with another employer during the
Reimbursement Period and is eligible to receive health and/or
medical benefits under such other employer’s plans, the
Company’s payment obligation under this paragraph shall be
reduced to the extent that comparable benefits and/or coverage is
provided under such other employer’s plans. For the avoidance
of doubt, Executive shall be responsible for paying any U.S.
federal or state income taxes associated with the Benefits
Payments.
Provided that a
Change in Control (as defined in Section 4.8 below) has not
then occurred, within the period beginning on the date that is six
(6) months prior to the expiration of the Term and ending on
the date that is three (3) months prior to the expiration of
the Term (the “Notice Period”), the Company shall
deliver a written notice to Executive stating either (i) that
the Company does not intend to offer Executive a new employment
agreement to take effect at the expiration of the Term (a
“Non-Renewal Notice”) or (ii) that the Company
offers Executive a new employment agreement to take effect at the
expiration of the Term upon terms (other than the length of the
term of such new employment agreement) that are at least as
favorable to Executive as the terms of this Agreement, and the
material terms of such offer shall be summarized or set forth in
the notice (“Renewal Notice”). If the Company delivers
a Non-Renewal Notice, or if the Company fails to deliver either a
Renewal Notice or a Non-Renewal Notice within the Notice Period,
Executive’s employment shall be terminated at the expiration
of the Term (or at such earlier date as may be set forth in the
Non-Renewal Notice), and such termination shall be a Termination
Without Cause, whereupon, subject to Sections 4.5, 4.6, 4.7,
4.10 and 5.3 below, Executive shall be entitled to receive the
amounts and benefits as provided under this Section 4.2. If
the Company delivers a Renewal Notice and Executive fails to accept
such offer in writing prior to the date that is ninety
(90) days following delivery of the Renewal Notice,
Executive’s employment shall be terminated as of such
90 th
day and such termination shall be a
Termination Without Cause, whereupon, subject to Sections 4.5,
4.6, 4.7, 4.10 and 5.3 below, Executive shall be entitled to
receive the amounts and benefits as provided under this
Section 4.2 except that “1” shall be substituted
for “2” in Section 4.2(b)(i) for purposes of
calculating Executive’s Severance Payment and “12-month
anniversary” shall be substituted for “24-month
anniversary” for purposes of calculating Executive’s
Benefits Payments and Reimbursement Period under this
Section 4.2.
Executive
acknowledges that the payments and benefits described in this
Section 4.2, together with any rights or benefits under any
written plan or agreement which have vested on or prior to the
termination date of Executive’s employment under this
Section 4.2, constitute the only payments which Executive
shall be entitled to receive from the Company hereunder in the
event of any termination of his employment pursuant to this
Section 4.2, and the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his
employment.
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4.3 Termination
of Employment With Good Reason . In addition to any other
remedies available to Executive at law, in equity or as set forth
in this Agreement, Executive shall have the right during the Term,
upon written notice to the Company, to terminate his employment
hereunder upon the occurrence of any of the following events
without the prior written consent of Executive: (a) a material
reduction in Executive’s then current Base Salary; (b) a
material reduction in Executive’s authority, duties or
responsibilities with the Company; (c) a material change in
the office or location at which Executive is required to perform
services hereunder, or (d) a material breach by the Company of
any provision of this Agreement (a “Termination With Good
Reason”).
Notwithstanding
the foregoing, no purported Termination With Good Reason pursuant
to this Section 4.3 shall be effective unless all of the
following provisions shall have been complied with:
(i) Executive shall give the Company a written notice of
Executive’s intention to effect a Termination With Good
Reason, such notice to state in detail the particular circumstances
that constitute the grounds on which the proposed Termination With
Good Reason is based and to be given no later than ninety
(90) days after the initial occurrence of such circumstances;
(ii) the Company shall have thirty (30) days after
receiving such notice in which to cure such grounds, to the extent
such cure is possible; and (iii) if the Company fails to cure
such grounds within such 30-day period, Executive terminates his
employment hereunder on the last day of such 30-day
period.
In the event that
a Termination With Good Reason occurs, then, subject to
Sections 4.5, 4.6, 4.7, 4.10 and 5.3 below, Executive shall
have the same entitlement to the amounts and benefits as provided
under Section 4.2 for a Termination Without Cause.
Executive
acknowledges that the payments and benefits referred to in this
Section 4.3, together with any rights or benefits under any
written plan or agreement which have vested on or prior to the
termination date of Executive’s employment under this
Section 4.3, constitute the only payments which Executive
shall be entitled to receive from the Company hereunder in the
event of any termination of his employment pursuant to this
Section 4.3, and the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his
employment.
4.4 Death;
Disability . In the event that Executive dies or becomes
Disabled (as defined herein) during the Term, Executive’s
employment shall terminate either (i) when such death occurs,
or (ii) upon written notice by the Company at any time after
Disability occurs (provided that, in the event of any Disability,
the Company shall have the right, but not the obligation, to
terminate this Agreement), and, in either event, and, subject to
Section 4.10, the Company shall pay Executive (or his legal
representative, as the case may be) as follows:
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(a)
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any
Base Salary and vacation time accrued but unpaid as of the date of
death or termination for Disability;
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(b)
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any
reimbursement for expenses incurred in accordance with
Section 3.2; and
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(c)
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an
amount equal to Executive’s annual Base Salary in effect on
such termination date multiplied by 2, payable in a single lump sum
on the sixtieth (60th) business day following the termination date;
provided , however , that, in the event Executive is
eligible to participate in, and is covered by, the Company’s
basic life insurance group benefit plan, the Company’s
obligation under this subsection 4.4(c) shall be reduced
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to an amount
equal to Executive’s annual Base Salary in effect on such
termination date multiplied by 1, payable in a single lump sum on
the sixtieth (60th) business day following the termination
date.
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For the purposes
of this Agreement, Executive shall be deemed to be
“Disabled” or have a “Disability” if,
because of Executive’s physical or mental disability, he has
been substantially unable to perform his duties hereunder for
twelve (12) work weeks in any twelve (12) month period.
Executive shall be considered to have been substantially unable to
perform his duties hereunder only if he is either (a) unable
to reasonably and effectively carry out his duties with reasonable
accommodations by the Company or (b) unable to reasonably and
effectively carry out his duties because any reasonable
accommodation which may be required would cause the Company undue
hardship. In the event of a disagreement concerning
Executive’s perceived Disability, Executive shall submit to
such examinations as are deemed appropriate by three practicing
physicians specializing in the area of Executive’s
Disability, one selected by Executive, one selected by the Company,
and one selected by both such physicians. The majority decision of
such three physicians shall be final and binding on the parties.
Nothing in this paragraph is intended to limit the Company’s
right to invoke the provisions of this paragraph with respect to
any perceived Disability of Executive.
Notwithstanding
the foregoing, to the extent and for the period required by any
state or federal family and medical leave law, upon
Executive’s request (i) he shall be considered to be on
unpaid leave of absence and not terminated, (ii) his group
health benefits shall remain in full force and effect, and
(iii) if Executive recovers from any such Disability, at that
time, to the extent required by any state or federal family and
medical leave law, upon Executive’s request, he shall be
restored to his position hereunder or to an equivalent position, as
the Company may determine, and the Term of Executive’s
employment hereunder shall be reinstated effective upon such
restoration. The Term shall not be extended by reason of such
intervening leave of absence, nor shall any compensation or
benefits accrue in excess of those required by law during such
intervening leave of absence. Upon the expiration of any such
rights, unless Executive has been restored to a position with the
Company, he shall thereupon be considered terminated.
Executive
acknowledges that the payments referred to in this
Section 4.4, together with any rights or benefits under any
written plan or agreement which have vested on or
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